Binance wants the $1.76B FTX lawsuit dismissed, blames SBF for collapse

Binance has filed a motion in Delaware Bankruptcy Court to dismiss a lawsuit brought by the estate of FTX Trading Ltd., which seeks to recover $1.76 billion related to a 2021 share buyback deal. The crypto exchange contends that the estate is attempting to redirect blame for its collapse from the criminal misconduct of founder Sam Bankman-Fried.

In the motion submitted on May 16, Binance’s legal team called the suit “legally deficient,” adding that FTX’s bankruptcy was the result of internal failures rather than any wrongful action on Binance’s part. 

According to the filing, the lawsuit “goes to almost absurd measures to downplay” the role of Bankman-Fried, who was convicted in 2023 of seven counts of fraud, conspiracy, and money laundering and is now serving a 25-year federal prison sentence.

Dispute over $1.76 billion transfer

The plaintiffs are suing Binance on the basis of a July 2021 transaction, in which the former sold its equity stake in FTX back to the company. In return, Binance allegedly received a substantial sum in crypto assets, funds the FTX estate claims were improperly drawn from customer deposits.

The bankruptcy estate alleges this deal was executed while the exchange was already insolvent, making it a fraudulent transfer under US bankruptcy law. 

Binance expostulates the claims, saying FTX was operating for 16 months after the transaction and insists that no insolvency existed at the time. The crypto exchange added that the entities named in the lawsuit, Binance Holdings Limited and related affiliates, were not parties to the share repurchase agreement and are not properly identified as transferees.

The crypto exchange wants courts to dismiss the complaints for failing to meet the legal requirements for an intentional or constructive fraudulent transfer. 

Among its arguments, Binance invokes the Bankruptcy Code’s “safe harbor” provision, which shields certain financial transactions from clawback claims. It propounded that FTX did not receive less than “reasonably equivalent value” for the repurchase or “Binance acted with fraudulent intent.”

Binance says case lacks jurisdictional grounds and causality

In another element of Binance’s defense, the US court lacks authority over the foreign entities listed in the complaint, none of which are incorporated or based in the United States.

“General jurisdiction exists only if the entity-defendant is essentially ‘at home’ in the forum, but Plaintiffs’ own allegations confirm that the BHL Defendants are not ‘at home’ in the US: they are foreign corporations with foreign headquarters,” Binance’s lawyers surmised.

In its filing, Binance insisted that Zhao’s tweet was prompted by information already in the public domain, specifically referencing a November 2, 2022, CoinDesk report that exposed an overlap between FTX and its sister firm, Alameda Research, not evidence of manipulative intent. 

“The Complaint contains no such facts,” Binance stated.

The company’s lawyers argue that many of the allegations are speculative theories and unverified statements made in hindsight, often originating from a “convicted fraudster,” identified as Bankman-Fried.

Second round of FTX creditor payouts scheduled

Away from court sessions, the FTX estate is proceeding with its second round of payouts to creditors. On May 15, 2025, FTX Trading Ltd. and the FTX Recovery Trust announced the next phase of distributions as part of their Chapter 11 Plan of Reorganization.

According to the announcement, eligible creditors who have completed all pre-distribution steps can expect to receive funds starting May 30. The payments will be delivered through BitGo or Kraken, two designated distribution service providers, and should arrive within one to three business days of the release date.

The plan outlines varying payout percentages depending on the class of claim. Dotcom Customer Entitlement Claims (Class 5A) will receive 72% of their approved amount. 

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